Consumer Products May Break Down Due to No Fault of the Consumer

question 16

Multiple Choice

Consumer products may break down due to no fault of the consumer. Explain how a manufacturer's warranty to replace faulty products can reduce the risk on the consumer.

• A) If the product breaks down, the consumer need not bear the cost of replacement.
• B) The cost to the consumer is the same whether the product breaks down or not.
• C) The consumer can be sure of getting a functional product.
• D) a and b.
• E) a, b, and c.

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Definitions:

Variable Cost

Costs that change in proportion to the level of output or activity, such as materials and labor used in production.

Fixed Cost

A constant expense that does not change with the level of production or sales.

Total Revenues

The complete amount of income generated by a company or organization before any expenses are deducted.

Average Total Cost

The total cost of production divided by the number of units produced, representing the average cost per unit.